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Dairy producer Emmi prepares to go public

Emmi products range from cheese to lifestyle drinks. Emmi

Leading Swiss dairy company, Emmi, whose products are promoted by tennis star Roger Federer, is preparing to offer its shares to the public.

In preparation for the big event, Emmi’s top managers have this month been touring central Switzerland to drum up interest in the idea.

Emmi, a producer of health and lifestyle drinks, will soon reach an annual turnover of SFr2 billion ($1.59 billion), a quarter of which is achieved through exports.

Hundreds of dairy farmers listened attentively as chairman Fritz Wyss, CEO Walter Huber and marketing director Erich Kienle spoke to them about “success in an open Europe”.

As milk producers, many of them are majority stakeholders in Emmi through their membership of the Central Swiss Milk Producers cooperative.


The raw material for all the trendy health drinks, yoghourts and cheese varieties – milk – is still produced within Switzerland’s rigid agricultural system.

But the processing of the milk into chilled and dairy products, including cheese, is already being done in a modern, industrial way and is becoming increasingly global.

Huber speaks of agricultural markets, bilateral agreements and the World Trade Organisation round of talks. “If we remain independent, we do not have to go to Brussels,” the CEO told farmers.

Swiss farmers know that changes must take place, as milk subsidies are not going to last forever. No one is as strongly exposed to liberalisation as they are.

This is the background against which Emmi has to operate, performing a balancing act between Swiss milk policy and global branding.

Building bridges

Emmi must build bridges between the increasingly efficient cowsheds of central Switzerland and modern global marketing and finance.

And the company seems to be performing well, with turnover soon expected to reach the SFr2-billion mark.

The Swiss market leader now wants to take its shares to the stock exchange. In financial jargon, this is called an Initial Public Offering (IPO).

It is not just a question of convincing the dairy farmers of central Switzerland, where Emmi has its headquarters, how Roger Federer can promote dairy products from Switzerland.

Another message is that as majority shareholders, the farmers will benefit when Emmi shares are floated.

Trading on the stock exchange should come as nothing new to the farmers. They know all about the old cattle markets, and many farmers are these days selling their newborn calves on the internet.

Making money

Another aspect of the IPO is that it makes money. “Going public should bring liquidity of about SFr100 million into Emmi coffers,” commented analyst Peter Gasser in a report from Zurich Cantonal Bank.

Central Swiss Milk Producers, which is the main shareholder with 72 per cent, will retain a majority of shares after the IPO.

Emmi has been developing a series of convenience products over the past few years, modernising in particular its yoghourt range.

“Emmi can diversify, particularly in the chilled-product range, with innovative products,” company spokesman Stephan Wehrle told swissinfo.

The company’s Benecol drink belongs to the so-called functional-food range and is aimed at reducing cholesterol in the blood, while Caffè Latte belongs to the lifestyle and wellness range.

On the hoof

“Contrary to traditional cheese, these products are increasingly consumed outside the home, which reflects today’s consumer trend,” Wehrle said.

“You can find them everywhere and you consume them everywhere, whether at home, in the train or in the plane,” he added.

But Wehrle explains that cheese is a centuries-old product that can be further developed through the gradual introduction of innovations.

Marketing can also be intensified, he says. One example is “cave-matured” hard cheese, which through marketing is catching on as a premium product.

Traditionally, Switzerland has tended to export hard cheese because of its high quality and image, but Emmi has stepped up exports of chilled products in the past few years.

“Swissness helps in the fresh products range,” Wehrle said.

The raw material – milk from Switzerland – is an effective advertising tool. But because of high wages it is expensive to produce, which leads to the usual Swiss premium formula: a higher price but a high-quality product.

swissinfo, Alexander Künzle

Turnover 1993: SFr500 million ($396 million).
Turnover 2005 (estimated): SFr1.95 billion.
Employees: 2,600.
Suppliers: About 90,000 cows from 5,450 dairy farmers.

Branch comparison (turnover in SFr billions, 2003)
Emmi: 1.9
Dairy Crest (Britain): 2.8
Nordmilch (Germany): 3.3
Bongrain (France): 6
Lactalis (France): 8
Danone (France): above ten

The Emmi Group wants to go public as early as this year.

The main shareholder will remain the Central Swiss Milk Producers cooperative, which was founded in 1907.

Emmi was formed in 1993 as an independent company after separating from the Swiss Milk Association.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR